After the pandemic forced big banks to extend their salaries and step up their digital banking and customer support offerings, they returned to what they knew: wielding the ax.
Already this year, six major US banks have announced layoffs and branch closures as part of aggressive cost-cutting measures. Wells Fargo, for example, announced it can lay off a quarter of its workforce to reduce spending by up to $ 10 billion over the next few years.
The opposite is happening in New Jersey’s 88 state-chartered community banks, where many are thriving, thanks to an explosion in mortgage refinancing and the windfall created by the paycheck protection program processing.
“This has given us a great opportunity to reconnect with our customers and try to help them get through this pandemic mess,” said Jane E. Allerman-Rey, President of Spencer Savings Bank, which has 20 branches in northern New Jersey and over $ 3 billion in assets. “It has become a great opportunity to attract new businesses.
“When life gives you lemons, you make lemonade.”
Allerman-Rey said Spencer treated 370 PPP loans for $ 35.3 million as last Monday. With Congress extending the program until May 31, community banks are expected to see even more leads, especially as the current P3 loan cycle targets small businesses. This year, Allerman-Rey said, loans have averaged $ 70,000 and borrowers tend to have fewer than 20 employees.
Allerman-Rey, who was promoted late last year to chairman of Elmwood Park-based Spencer, said many PPP clients have come to the bank after getting the whirlwind of a big deal. national bank regarding their Small Business Administration loan application.
“We would look into the SBA system and see that they were approved, and we never told them,” she said. “I could see the consequences of these poor people who were customers they basically didn’t care about.”
There is a whole class of community banks that process online loan applications in volume instead of focusing on traditional face-to-face customer service. They are called fintechs, the business of which is making loans on smartphone apps owned by high-tech venture capital startups.
New Jersey’s most active is Cross river, which has a single branch in Teaneck with $ 2.5 billion in assets. However, Cross River staff at its Fort Lee headquarters issue $ 1 billion in loans per month, most of it from online apps. It is one of the main PPP loan processors in the country.
Today, there are nearly 5,000 community banks in the United States, according to the Comptroller of the Currency. They tend to operate in rural areas, underserved communities and towns and villages like that of New Jersey. Banks are small local institutions that have strong links with small businesses, agricultural loans, and consumer loans.
At one time, community banks were the mainstays of the larger communities in which they operated, when customers chose a bank based on its proximity to work or home. But as customer preferences have shifted to online banking, their proximity to branches has become less important.
The pandemic has only accelerated this trend.
A May 2020 consumer survey Fiserv found that 36% of bank customers reduced their use of in-branch ATMs, 27% increased use of mobile check deposits and 33% increased use of mobile payment apps.
This leaves community banks with an important question: How do they maximize relationships with their customers when they visit the less important branch? Community bankers say they are working hard to reach their customers and stay with their borrowers through tough times, like the COVID recession.
“When people are having trouble finding someone to help them, that’s where we shine. When it starts to get a little tricky, that’s when customers start calling us, ”said James D. Nesci, president of the Rutherford-based company. Blue foundry bank, formerly known as Boiling Springs Savings Bank.
“We believe that when the big banks pull out, that’s when we lean forward,” he said. “I can’t stress you how much we hold hands. Every name matters. We call them personally. We keep finding new ways to reach our customers because we think it’s really important. “
Blue Foundry, which has $ 1.6 billion in assets, recently completed major renovations to its 17 branches across the state. The company filed with the Securities and Exchange Commission in March for an initial public offering, priced at $ 10 per share.
“We’re just trying to win with great customer service, one customer at a time,” Nesci said. “Every customer is more meaningful when you’re in a small bank.”
George Jordan writes a weekly column on business and development in New Jersey. It can be reached at [email protected].